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Weekly Insights - Edition 112
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Weekly Insights - Edition 112

This week: treasuries, stocks vs bonds, EM sovereign, LatAm equities, global vs US equities, market update, important change in "defensive value" stocks...

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Callum Thomas
Jun 26, 2023
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Weekly Insights - Edition 112
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Welcome to the Weekly Insights report! The weekly insights report presents some of the key findings from our institutional research service, providing an entrée experience (in terms of price and size).


Global Markets Monitor - notable developments

Major equity benchmarks running into resistance, most of note is US equities and tech seeming to pullback from overbought conditions. On sectors, REITs, gold miners, and banks are seeing renewed weakness, tech stalling somewhat, and notably; pause in defensive sector weakness.

Treasury yields still trading a tight range, credit spreads/CDS pricing pausing their declines. EM sovereign yields mostly lower, developed sovereign yields mixed/consolidating.

DXY pausing declines; rebounding off short-term support. Asian/EMFX slightly weaker, notably USDCNY continues to move higher as the Renminbi depreciates further, and JPY broadly weak. Commodities weak, gold edging lower, WTI crude also weaker, natural gas higher, industrial metals failing to rally as skepticism remains on China stimulus. Volatility edging lower across asset classes/markets.

Market themes:  Defensive Value stocks...
-defensive sectors are attempting to base (as the S&P500 stumbles at resistance/overbought levels).
--the group also enjoys seasonal tailwinds this time of year.
-relative value, positioning, market cap weight have also dropped back towards contrarian bullish levels.
--hence as a group defensive value stocks are looking attractive again.
---this by itself is an interesting observation in so far as what it tells us about the near-term risk outlook for risk assets (defensive assets do well when risk assets don't).

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